As the world exits the pandemic, inflation is the monster we forgot was real

As Australia prepares for rampant inflation, we cannot simply say that all this will eventually pass, and in the meantime lay poor people on the sacrificial altar.

Inflation is the monster we forgot was real. We are now at the point where a full generation of Australians has never lived through the economic horrors of the 1970s and ’80s.

The Reserve Bank has been rightly towelled up for not acting quicker to address soaring prices but in a sense it has also been a victim of its own success. The RBA has done so well for so long at keeping inflation within its target bandwidth of 2 to 3 per cent that it has almost forgotten how to fail.

It has certainly remembered now and its only real remaining lever of interest rate rises will put middle and working class Australia on the rack.

As a lowly arts student – education, incidentally, is one of the highest rising costs driving up the CPI – I will leave the arguments over what to do about it to the economists. Although I will also leave you with the old joke that if you laid all the economists in the world end to end they still wouldn’t reach a conclusion.

But one thing I am sure of is that we cannot simply say that all this will eventually pass and in the meantime lay poor people on the sacrificial altar of macroeconomic theory.

One thing that is abundantly clear is that theory has not served us very well so far. Particularly the notion from lockdown loving Covid eliminationists that we could simply hit pause on the economy and then restart it again and everything would go back to normal.

Instead the economy has roared back to life with such voracity that it is eating us alive, fuelled largely by skyrocketing housing costs caused by people resigned or addicted to working from home and supply chain problems with materials.

As Australia prepares for rampant inflation, we cannot simply say that all this will eventually pass, and in the meantime lay poor people on the sacrificial altar.

Interest rate rises will put middle and working class Australia on the rack.

Meanwhile Vladimir Putin’s insane Quixotic war on the people of Ukraine has driven fossil fuel prices through the roof, thus exposing state and federal government failures to do, frankly, anything about energy policy.

Despite our abundant resources of coal, gas, wind and solar, Australia has clearly not done enough to shore up dirty but reliable baseload power supply nor installed enough clean energy infrastructure to replace it. We are the very definition of half-pregnant and we have now been caught with our pants down.

Our new Labor government is acting fast and smart on this, including the emergency meeting of energy ministers this week – about 10 years too late, but still … – and an immediate waiving of long-term climate concerns in favour of the far more pressing problem of getting affordable energy to people right here and now.

Rest assured I am still all-in on reaching net zero by 2050 – that is a pretty indelible matter of public record – but I sure as hell won’t tolerate the sacrifice of pensioners and the working poor to get there. Lettuce for all, I say.

And so the only question, the eternal question, is what do we actually do?

For people on the minimum wage, I cannot see how you could deny a pay rise of 5 per cent. While it is true it may add some inflationary pressure, the alternative is they go backwards and very possibly go under. And by all current projections even 5 per cent won’t be enough to keep pace.

Labor could simply give away more money in its upcoming mini-Budget but this would give rise to the same – arguably credible – claims of inflationary pressure.

But for people on welfare, the situation is even more dire. The $250 sugar hit they got in the last federal budget will be long gone by now. As welcome as it was, it would have evaporated the day it landed.

Labor could simply give away more money in its upcoming mini-Budget but this would give rise to the same – arguably credible – claims of inflationary pressure.

A better measure would surely be to provide power bill relief and increase and widen the concessions already provided for some. This could ease costs without fuelling a consumer plunge, surely the whole point of the game.

Speaking of which, the banks need to lift theirs. If interest rates are going to be violently jacked up for borrowers, surely they need to also jack up the rates for savers.

If we are trying to keep inflation down then isn’t a critical element of that giving people an incentive to save money instead of spending it?

Again, what do I know – I am just a lowly arts student. But it seems to me that the same banks who used the last global financial crisis to argue that they were good corporate citizens and not a bunch of a*seholes could use the current one to actually prove it.

We all understand that there are big global forces at play here, many of which Australia cannot control. But we can control how they impact our most vulnerable and we can make sure that no one is left behind.

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